Senior Quantitative Analyst, Saxo Bank
Summary: Crypto exchanges are seeing record-high ruble trading volumes, while major exchanges are declining a proposal from a Ukraine official to freeze crypto accounts related to Russia.
With the Russian ruble plummeting against the US dollar and the Euro, investments into cryptocurrencies seem to be an increasingly popular alternative to the ruble. According to a report by CoinShares, crypto exchanges with ruble trading saw volumes soaring by 121% over the past week, and the world’s largest crypto exchange, Binance, show record-high trading volumes in USDT/RUB over the weekend – see chart below. USDT (also know as Tether) is a stablecoin which aims to keep the cryptocurrency valuation stable to the US dollar.
The rising volumes may likely raise concerns whether cryptocurrencies can be used by Russia to get around some of the economic sanctions imposed on the country. The president of the European Central Bank, Christine Lagarde, hinted to this during an informal meeting on Friday, where she in a response to a question on Russia potentially using crypto to evade sanctions, replied that the currently proposed framework on regulating digital assets in EU should be pushed through as quickly as possible.
Official in Ukraine calling for a block of Russian crypto users
On Sunday, the Minister of Digital Transformation of Ukraine urged global cryptocurrency exchanges to block all accounts belonging to Russian nationals. According to estimates, Russian citizens own around USD 200 bn worth of cryptos according to numbers from early February.
Binance was the first crypto exchange to decline the request stating that they are “not going to unilaterally freeze millions of innocent users' accounts. Crypto was meant to provide greater financial freedom for people across the globe.". They will, however, be “… blocking accounts of those on the sanctions list … and ensuring that all sanctions are met in full” [source: Reuters]. Two other major cryptoexchanges, Coinbase Global Inc. and Kraken, also declined the request from Ukraine. The CEO of Kraken stated on Twitter that the company “cannot freeze the accounts of our Russian clients without a legal requirement to do so”. If the global regulators become too afraid of crypto as a medium to bypass some of the economic sanctions, the exchanges may be forced to deviate from some of their core crypto values.
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